The Perfect Store: Inside Ebay

“I wanted to do something different, to give the individual the power to be a producer as well as a consumer.”

Skoll made some initial inquiries into how it could be done, from handing out shares to eBay's biggest buyers and sellers, to creating a mechanism for the entire eBay community to buy pre-IPO stock. But the idea ran into resistance from the investment bankers and lawyers. The investment bankers had selfish reasons for opposing the plan. Pre-IPO sha

A famous New Yorker cartoon shows two dogs seated at a computer, one saying to the other:“On the Internet, nobody knows you're a dog.” The Internet is a great leveler, giving people with social disadvantages in the real world—the physically or mentally disabled, the unattractive, the shy—a place to shine.

With millions of buyers and sellers able to participate in every transaction, market flaws that allowed goods to sell for more or less than they should have were being corrected. EBay was now a price-setting mechanism—a stock market for everyday goods.

But with eBay, registered users had a significant investment in remaining on the site. They had reputations, in the form of Feedback Forum ratings reflecting months, even years, of online activity. If they switched to Onsale Exchange or Auction Universe, they would have to leave those ratings behind.

The first markets arose at crossroads, where traders came to reach the largest number of potential customers. If sales at the crossroads were good, the merchants stored their wares there permanently. If they were the best in the whole region, traders brought their families and settled there. In time, they put up walls and built an infrastructure, a

But auctions excel when they are called on to set prices for items whose value is inherently indeterminate. Some of history's first recorded auctions were held at the gates of Rome by soldiers selling off war plunder—used, foreign, and one-of-a-kind goods whose worth was subject to debate. In modern times, land-based auctions have been used mainly

“Brands are quick-drying cement,” she liked to say. Amazon had hardened in the public's mind as a fixed-price book, music, and video destination—not a place to go for auctions.

Storefronts would allow sellers almost as much autonomy as they had on their own websites. But by tapping into eBay's millions of registered users, they could solve the problem that had doomed so many small e-commerce sites—finding customers.